IDEAS home Printed from https://ideas.repec.org/a/eee/glofin/v58y2023ics1044028323000984.html
   My bibliography  Save this article

Digital transformation in finance and its role in promoting financial transparency

Author

Listed:
  • Gao, Xiaoxue

Abstract

A crucial issue in financial economics pertains to enhancing the transparency of accounting and financial reporting within companies. This paper focuses on China, aiming to quantify the relationship between digital finance and financial accounting transparency from 1990 to 2021 using the autoregressive distributed lag bounds test. The results confirm that digital finance exerts a significant effect only in the long term; in the short term, it lacks the necessary efficacy to enhance financial transparency. The proliferation of information and communication technology (ICT) in China, in both the short and the long term, is a pivotal policy for augmenting accounting transparency. Moreover, an increase in both the short- and the long-term corporate income tax rate is poised to undermine the transparency of Chinese companies' financial statements. The foremost policy implications encompass the advancement of digital finance markets through cryptocurrencies, promotion of ICT diffusion policies, and enhancement of societal financial transparency literacy.

Suggested Citation

  • Gao, Xiaoxue, 2023. "Digital transformation in finance and its role in promoting financial transparency," Global Finance Journal, Elsevier, vol. 58(C).
    • Handle: RePEc:eee:glofin:v:58:y:2023:i:c:s1044028323000984
    DOI: 10.1016/j.gfj.2023.100903
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1044028323000984
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.gfj.2023.100903?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Mkhaiber, Achraf & Werner, Richard A., 2021. "The relationship between bank size and the propensity to lend to small firms: New empirical evidence from a large sample," Journal of International Money and Finance, Elsevier, vol. 110(C).
    2. Peterson K. Ozili, 2018. "Impact of digital finance on financial inclusion and stability," Borsa Istanbul Review, Research and Business Development Department, Borsa Istanbul, vol. 18(4), pages 329-340, December.
    3. Sun, Yunpeng & Gao, Pengpeng & Razzaq, Asif, 2023. "How does fiscal decentralization lead to renewable energy transition and a sustainable environment? Evidence from highly decentralized economies," Renewable Energy, Elsevier, vol. 206(C), pages 1064-1074.
    4. Johannesen, Niels & Larsen, Dan Thor, 2016. "The power of financial transparency: An event study of country-by-country reporting standards," Economics Letters, Elsevier, vol. 145(C), pages 120-122.
    5. Sun, Yunpeng & Gao, Pengpeng & Raza, Syed Ali & Shah, Nida & Sharif, Arshian, 2023. "The asymmetric effects of oil price shocks on the world food prices: Fresh evidence from quantile-on-quantile regression approach," Energy, Elsevier, vol. 270(C).
    6. Hui, Peng & Zhao, Hui & Liu, Desheng & Li, Ye, 2023. "How does digital finance affect regional innovation capacity? A spatial econometric analysis," Economic Modelling, Elsevier, vol. 122(C).
    7. Chia, Poh San & Law, Siong Hook & Trinugroho, Irwan & Wiwoho, Jamal & Damayanti, Sylviana Maya & Sergi, Bruno S., 2022. "Dynamic linkages among transparency, income inequality and economic growth in developing countries: Evidence from panel vector autoregressive (PVAR) model," Research in International Business and Finance, Elsevier, vol. 60(C).
    8. Nair, Rajiv & Muttakin, Mohammad & Khan, Arifur & Subramaniam, Nava & Somanath, V.S., 2019. "Corporate social responsibility disclosure and financial transparency: Evidence from India," Pacific-Basin Finance Journal, Elsevier, vol. 56(C), pages 330-351.
    9. Sun, Yunpeng & Gao, Pengpeng & Tian, Wenjuan & Guan, Weimin, 2023. "Green innovation for resource efficiency and sustainability: Empirical analysis and policy," Resources Policy, Elsevier, vol. 81(C).
    10. Qin, Xiaodi & Wu, Haitao & Li, Rongrong, 2022. "Digital finance and household carbon emissions in China," China Economic Review, Elsevier, vol. 76(C).
    11. Sun, Yunpeng & Tian, Wenjuan & Mehmood, Usman & Zhang, Xiaoyu & Tariq, Salman, 2023. "How do natural resources, urbanization, and institutional quality meet with ecological footprints in the presence of income inequality and human capital in the next eleven countries?," Resources Policy, Elsevier, vol. 85(PA).
    12. Ben Cormier, 2023. "Chinese or western finance? Transparency, official credit flows, and the international political economy of development," The Review of International Organizations, Springer, vol. 18(2), pages 297-328, April.
    13. Liu, Yang & Dilanchiev, Azer & Xu, Kaifei & Hajiyeva, Aytan Merdan, 2022. "Financing SMEs and business development as new post Covid-19 economic recovery determinants," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 554-567.
    14. Thorsten Beck & Asli Demirgüç-Kunt & María Pería, 2011. "Bank Financing for SMEs: Evidence Across Countries and Bank Ownership Types," Journal of Financial Services Research, Springer;Western Finance Association, vol. 39(1), pages 35-54, April.
    15. Liu, Tingting & Liu, Yu & Ullah, Barkat & Wei, Zuobao & Xu, Lixin Colin, 2021. "The dark side of transparency in developing countries: The link between financial reporting practices and corruption," Journal of Corporate Finance, Elsevier, vol. 66(C).
    16. Ozili, Peterson Kitakogelu, 2018. "Impact of Digital Finance on Financial Inclusion and Stability," MPRA Paper 84771, University Library of Munich, Germany.
    17. Gullo, Valentina & Montalbano, Pierluigi, 2022. "Financial transparency and anomalous portfolio investment flows: A gravity analysis," Journal of International Money and Finance, Elsevier, vol. 128(C).
    18. Cormier, Benjamin, 2023. "Chinese or western finance? Transparency, official credit flows, and the international political economy of development," LSE Research Online Documents on Economics 115294, London School of Economics and Political Science, LSE Library.
    19. Chen, Yang & Yang, Shengping & Li, Quan, 2022. "How does the development of digital financial inclusion affect the total factor productivity of listed companies? Evidence from China," Finance Research Letters, Elsevier, vol. 47(PB).
    20. Beck, T.H.L. & Demirgüc-Kunt, A. & Martinez Peria, M., 2011. "Banking financing for SME's : Evidence across countries and bank ownership types," Other publications TiSEM c4d491c9-2cc6-40f6-ad55-a, Tilburg University, School of Economics and Management.
    21. Kame Babilla, Thierry U., 2023. "Digital innovation and financial access for small and medium-sized enterprises in a currency union," Economic Modelling, Elsevier, vol. 120(C).
    22. Bańkowska, Katarzyna & Ferrando, Annalisa & García, Juan Angel, 2020. "Access to finance for small and medium-sized enterprises after the financial crisis: evidence from survey data," Economic Bulletin Articles, European Central Bank, vol. 4.
    23. Sun, Yunpeng & Razzaq, Asif & Kizys, Renatas & Bao, Qun, 2022. "High-speed rail and urban green productivity: The mediating role of climatic conditions in China," Technological Forecasting and Social Change, Elsevier, vol. 185(C).
    24. Montes, Gabriel Caldas & Bastos, Júlio Cesar Albuquerque & de Oliveira, Ana Jordânia, 2019. "Fiscal transparency, government effectiveness and government spending efficiency: Some international evidence based on panel data approach," Economic Modelling, Elsevier, vol. 79(C), pages 211-225.
    25. Li, Guoxing & Yeh, Yin-Hua, 2023. "Western cultural influence on corporate innovation: Evidence from Chinese listed companies," Global Finance Journal, Elsevier, vol. 55(C).
    26. Goodell, John W. & Goyal, Abhinav & Hasan, Iftekhar, 2020. "Comparing financial transparency between for-profit and nonprofit suppliers of public goods: Evidence from microfinance," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 64(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Guanwei Liu, 2024. "Accounting Conservatism and Corporate Governance: An Examination of the Influence on Financial Reporting Quality and Stakeholder Trust," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(3), pages 2158-2175, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cheng, Shixiong & Shu, Can & Jin, Meiling & He, Yuhang, 2023. "Balancing resources and sustainability: Analyzing the impact of mineral resources utilization on green growth," Resources Policy, Elsevier, vol. 86(PA).
    2. Hayder M. Kareem Al-Duhaidahawi & Jing Zhang & Mustafa S. Abdulreza & Sinan Abdullah Harjan & Sayyed Sadaqat Hussain Shah, 2019. "The Role of Financial Inclusion and Competitive Advantage: Evidence from Iraqi Islamic Banks," International Journal of Economics and Financial Issues, Econjournals, vol. 9(3), pages 193-199.
    3. Liu, Wen & Xu, Jiaqi & She, Shengxiang, 2023. "Green economic development by increasing efficiency of natural resource consumption," Resources Policy, Elsevier, vol. 85(PB).
    4. Xu, Jiaqi & Zhao, Jingfeng & Liu, Wen, 2023. "A comparative study of renewable and fossil fuels energy impacts on green development in Asian countries with divergent income inequality," Resources Policy, Elsevier, vol. 85(PA).
    5. Xu, Chunguang & Li, Xiaohui, 2023. "Achieving common prosperity and green development through utilizing natural resources," Resources Policy, Elsevier, vol. 85(PB).
    6. Liu, Nan & Teng, Long & Tian, Wenjuan & Li, Ying, 2023. "Does digitalization enhance fossil fuels resources efficiency?," Resources Policy, Elsevier, vol. 85(PA).
    7. Xu, Chunguang & Li, Xiaohui, 2023. "The efficiency of natural resource consumption and government administration concerning green economic growth in Asian countries," Resources Policy, Elsevier, vol. 82(C).
    8. Wang, Bo & Yang, Haoting & Tian, Wenjuan & Bi, Chunyu, 2023. "Determinants of trade of mineral resources between China and ASEAN," Resources Policy, Elsevier, vol. 85(PB).
    9. Yao, Shun & Li, Tongxin & Li, Ying, 2023. "Promoting sustainable fossil fuels resources in BRICS countries: Evaluating green policies and driving renewable energy development," Resources Policy, Elsevier, vol. 85(PA).
    10. Zhang, Pei & Hao, Dongyang, 2023. "Enterprise financial management and fossil fuel energy efficiency for green economic growth," Resources Policy, Elsevier, vol. 84(C).
    11. Yang, Jinghang & Xing, Yuanyuan & Han, Yuanyuan, 2023. "Utilization of E-commerce for fossil fuels allocation and green recovery," Resources Policy, Elsevier, vol. 85(PB).
    12. Dong, Weijian & Chen, Kanxiang & Liu, Xiaojun, 2023. "Role of regional trade agreements in enhancing investments in mineral resources projects in ASEAN," Resources Policy, Elsevier, vol. 85(PB).
    13. Wang, Bo & Yang, Haoting & Bi, Chunyu & Feng, Yanchao, 2023. "Green infrastructure and natural resource utilization for green development in selected belt and road initiative countries," Resources Policy, Elsevier, vol. 85(PA).
    14. Mao, Qian & Ma, Xinyuan & Sun, Yunpeng, 2023. "Study of impacts of blockchain technology on renewable energy resource findings," Renewable Energy, Elsevier, vol. 211(C), pages 802-808.
    15. Razzaq, Asif & Yang, Xiaodong, 2023. "Digital finance and green growth in China: Appraising inclusive digital finance using web crawler technology and big data," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    16. Zhang, Zhongqingyang & Mao, Ruixiang & Zhou, Zhongbao & Zeng, Zhijian, 2023. "How does digital finance affect green innovation? City-level evidence from China," Finance Research Letters, Elsevier, vol. 58(PB).
    17. Zhang, Jianhua & Liu, Yushan & Zhang, Weihua & Ma, Xinyuan, 2023. "Role of green technologies in enhancing the efficiency of natural resources," Resources Policy, Elsevier, vol. 83(C).
    18. Chen, Xiaoyu & Wang, Yujing & Li, Tongxin, 2024. "Examining the resource curse phenomenon, digital finance integration, and their impacts on economic growth: Empirical insights from South Korea," Resources Policy, Elsevier, vol. 88(C).
    19. Zhang, Dongyang, 2023. "Can digital finance empowerment reduce extreme ESG hypocrisy resistance to improve green innovation?," Energy Economics, Elsevier, vol. 125(C).
    20. Sun, Chenghao, 2023. "How are green finance, carbon emissions, and energy resources related in Asian sub-regions?," Resources Policy, Elsevier, vol. 83(C).

    More about this item

    Keywords

    China; Corporate income tax rate; Digital finance; Financial corruption; Financial transparency;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:glofin:v:58:y:2023:i:c:s1044028323000984. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620162 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.